Subprime F&I Training

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How many times have you lost a sale because you or someone in your auto dealership didn’t know how to work with a subprime customer? Maybe you failed to do your due diligence and landed a customer on a car they didn’t qualify for? Or maybe your desk manager pushed a deal through, inadvertently forfeiting all profit due to high acquisition fees because they had no idea they were dealing with a subprime customer in the first place? These are scenarios that unfold more often than anyone would like to admit. In some cases, salespeople have even gone to the extreme of sending subprime customers away just to avoid a confrontation with a less-than-thrilled F&I Manager. If you’ve ever seen any of this go down at your dealership, it’s time to take a long hard look at your subprime financing procedures.

Newsflash! Did You Know…

More than 57 percent of the car buying public today has near-average to subprime credit. Maybe this is news to you. If it is, rest assured it’s not news to your competition. And they’re counting on you to never get wise to it. When every fumbled subprime financing deal or subprime customer you send away winds up on their lot instead of yours, can you really blame them? Each day that you drag your feet about educating your staff on subprime financing is another day of lost sales.

The CarMax Benchmark

If you want a perfect example of how catering your processes to nonprime customers can make a huge difference in your profit margin, take a look at CarMax – which defines “nonprime” as near-average credit as Tier 2, and subprime credit as Tier 3. CarMax originated a total of $20.5 million in loans under its subprime test program, representing 0.8 percent of its retail unit sales. What does this mean? It means that nonprime and subprime customers represent a substantial bulk of untapped opportunity.

Getting Your Ducks in a Row

Now, hold on a minute. Before you race off in your newfound revelation that embracing subprime financing is the key to achieving killer profit, there are a few things you have to consider first. The fact is, most dealerships simply aren’t equipped with the processes necessary to take advantage of this largely unserved percentage of car buyers. Even fewer know what they need to do to make it fly. Things like…

  • Having the right inventory to serve a wide range of customers, budgets, and approvals.

  • Establishing solid bank relationships, and having access to a wide selection of banks that will offer reasonable terms.

  • Ensuring your F&I Manager knows subprime financing inside and out, including how to work with banks and how to put together a successful subprime deal. Provide adequate nonprime subprime F&I Training courses.

  • Having a well-defined F&I process in place that prevents buyers from using other people’s credit and saving you from lawsuits in the process.

  • Being able to defend yourself against Consumer Financial Protection Agency claims that your dealership might of used manipulated or confused customers into buying a car or additional products. Falling victim to this could get you shut down. Attending F&I Compliance training.

Making the decision to take on nonprime and subprime customers is a good one. But it’s no easy undertaking, especially if you go into it with blinders on.

The Unvarnished Truth
I’m always baffled by dealers who purchase trigger leads, only to turn around and point the finger of blame for bad results at lead providers. Working with nonprime and subprime leads is never business as usual, and anyone who thinks otherwise is only fooling themselves. Your sales staff must be trained on how to qualify buyers before landing them on a car they may not get approved for. They must learn and retain the working skills needed to reach out to the “other” 57 percent many other dealers ignore. With the right approach and the proper training, it can be done.
Chernek Consulting offers clear-cut solutions for training F&I nonprime and subprime customers. We can get your entire staff on board with a streamlined process that assures increased sales, retained profits and limited liability. With over three decades of experience working with major automotive retailers and as a director of finance for some of the leading automotive dealers in the Washington, D.C. marketplace, Chernek can help you develop nonprime and subprime business strategies that will keep your dealership ahead of the curve. It doesn’t have to be a chore working with the a nonprime on subprime customer. Chernek provides in-dealership customized to your specific needs- each dealer is unique Chernek is not a cookie cutter same to all and that is why our dealers love us!
Contact us today to discuss all our in-dealership customized training services. Check out our state of the art F&I interactive online training platform www.chernekconsultingvirtualpro.com !

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